Welcome to America’s Drug Laboratory

There was Gov. John Hickenlooper standing on the steps of the Colorado Capitol last week, making a speech holding a live baby goat calmly resting in his arms. And before you even ask: No, it had nothing to do with legal marijuana. But it was one of the few things, frankly, taking place around the building in the final week of the legislative session that didn’t.

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Inside the Capitol, more than a dozen marijuana lobbyists were busy following last-minute legislation: one bill dictating how the state will spend the first $24 million in tax revenues from its new recreational marijuana industry, another creating a first-of-its-kind credit co-op to give these businesses, still barred by federal law from using the banks, a way to better manage their money—and the state a better way to track it.

Across the street at the Denver Post, a team of reporters follows the legislation and pretty much every development related to legal marijuana for the paper’s new blog, aptly named The Cannabist. Every night, Coloradans tune into local newscasts offering the same marijuana-focused “investigations” (and my station is no exception) during May sweeps: One recent jaw-dropper involved a reporter urging parents to “have the edibles talk” with their kids after demonstrating that a four-year-old couldn’t tell the difference between a snickerdoodle and a snickerdoodle baked with hash oil. However facile the on-camera theatrics, these stories are timely, particularly with local hospitals reporting a big increase in the number of children rushed to emergency rooms after accidentally ingesting cookies and candies containing THC.

This is the brave new Colorado, where life is often far stranger than fiction—and those are just the headlines. Four-plus months and counting into the Rocky Mountain state’s bold weed experiment, it’s clear that marijuana legalization has led to some unanticipated problems, from a lethal overdose to cash-flow issues and some crime. But on the whole, it hasn’t been the disaster its opponents predicted. I remember a California sheriff’s prophecy to a Denver TV station of where legalization would lead: “Thugs put on masks, they come to your house, they kick in your door. They point guns at you and say, ‘Give me your marijuana, give me your money.’” Not so much, as it turns out.

“I think it’s gone more smoothly than we thought,” says Lewis Koski, the former cop-turned-gaming investigator now serving as Chief of Colorado’s new Marijuana Enforcement Division, an office of nearly 40 people monitoring every plant from seed to sale, poring over every requested business license, checking up on every complaint.

That assessment—that Colorado’s marijuana experiment is working—is widely shared by those within the industry and those tasked with regulating it. And the most recent poll shows that 56 percent of Coloradans think legalizing pot has been a good thing.

And yet, there are those headlines. Emergency rooms have seen an uptick in teenagers getting sick from “Spice,” the synthetic marijuana-like drugs classified as a controlled substance last year but still sold in gas stations and convenience stores. Synthetic marijuana, also referred to as bath salts or “K2,” can be between three and 800 times stronger than real marijuana and cause severe hallucinations, elevated heart rates and fatal overdoses—it’s responsible for one known death in Colorado and more than 200 hospitalizations so far. Just last week, DEA agents busted a “Spice” trafficking ring, arresting hundreds of people across 25 states. Houses are exploding seemingly daily from failed attempts to extract hash oil from dried, tightly packed marijuana leaves by pouring butane over them—“the meth labs of the 90s,” in the words of one local police chief. In western Colorado, police were lucky to discover a homeowner’s hash oil operation before it exploded last week only after the homeowner’s dog bit his genitals, leading him to call 9-1-1. And edible marijuana has already been blamed for two recent deaths—a college student leaping off a hotel balcony, a husband shooting his wife, both after eating pot.

Every day, growing numbers of Coloradans are getting high, a handful of entrepreneurs are getting rich, police are investigating various crimes related to the industry (or, more often, a persistent black market), lawmakers and public health experts are examining the early returns and revamping policy. And, for the most part, life continues just as it did before here in a state that is now—for better or worse—America’s marijuana policy laboratory.

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Chris Christie, the voluble New Jersey governor, is not waiting for the results to come in. Last month, Christie got Colorado’s collective dander up when he went on talk radio and lashed out at a caller asking about legalizing marijuana and promised: Not on my watch.

“Go to Colorado and see if you want to live there,” Christie said. “See if you want to live in a major city in Colorado where there’s head shops popping up on every corner and people flying into your airport just to come and get high. To me, it’s just not the quality of life we want to have here in the state of New Jersey and there’s no tax revenue that’s worth that.”

A New Jersey paper ridiculed Christie’s comparison (“Pity the poor saps who live in the beautiful Rocky Mountain State…” began a Star Ledger editorial), as did Colorado lawmakers. “When you’re counting your electoral votes, I guess he doesn’t think he needs Colorado’s nine,” said State Rep. Dan Pabon, a Denver Democrat who helped write the state’s new marijuana laws.

Hickenlooper offered a more subtle rejoinder, releasing a slew of statistics showing Colorado ranking far ahead of New Jersey in economic development, job growth, population health status and a host of other categories. It was the closest Hickenlooper, a Democrat facing reelection in November, has ever come to embracing Colorado’s newest boom industry – and yet he offered no rebuttal to Christie’s main point that legalizing marijuana has been a negative.

I remember sitting in Hickenlooper’s office the day legalization passed in 2012. “Don’t break out the Cheetos just yet,” he said—very much the cautious opponent. Still, the quirky, calculating governor, who’s made a career out of restoring the public’s faith in his vision of good government, has directed his administration to implement legal recreational marijuana in a responsible, effective manner. For the most part, that’s happened, aided in large part by an industry eager for legitimacy.

For evidence of just how hard the industry is trying to establish its mainstream credentials, you might note “Edible Events,” a new luxury lifestyle business specializing in gourmet cannabis food pairings, or the Colorado Symphony Orchestra’s recently announced “Classically Cannabis” concert series—basically, Beethoven and brownies.

Just last month, I was out for dinner when I bumped into Joe Hodas, a guy I used to work with when he was the spokesperson for Denver-based Frontier Airlines and I was a TV reporter new to town. I’d seen Joe on our station’s air as a spokesman for a new company called Dixie Elixirs, which produces marijuana-infused chocolates, candies and even “carbonated cannabis” beverages in seven flavors like “sparking peach” and “old fashioned sarsaparilla.”

I knew Joe had moved into corporate public relations a few years ago. What I didn’t know, until talking to him that night in the restaurant, was that Dixie Elixirs wasn’t one client in a larger portfolio—it was Joe’s employer. It took me the rest of the meal to absorb it: A marijuana manufacturer, just months into Colorado’s recreational marijuana experiment, has its own in-house communications shop.

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But all this started happening well before January. Colorado’s marijuana boom really began back in 2008, when the federal government and the state both took action, reducing enforcement and loosening rules for medical marijuana providers. This is when people here first took alarm as dispensaries, with garish signage flashing names like “Daddy Fat Sacks” and “Ganja Gourmet,” started popping up next to more traditional businesses in strip malls and storefronts across the state.

Long before the Denver Post recognized the power of pot-related coverage to generate visits to its website, the city’s alternative weekly newspaper, Westword, noticed how big the medical marijuana industry was getting because new dispensaries were suddenly eating up ad space.

“We decided to hire a pot reviewer and when we put the job online I thought we’d have applications in five minutes,” Westword editor and publisher Patty Calhoun told me. “I was wrong, though. We had them in three.”

The pot critic, who does weekly reviews of different marijuana strains offered at area shops, has helped establish the paper as the go-to local source for news on a growing industry. “He really likes pot,” Calhoun admits. In late 2012, Westword added another new column: “Ask a Stoner.” The advertising dollars don’t hurt either.

“It’s a natural fit for us,” Calhoun says. “And I will say that alternative newspapers across the country are suddenly very envious of weeklies in Colorado.”

Many of the people in the marijuana industry itself, like Calhoun and others in seemingly unrelated fields of journalism and private security, simply saw an opportunity.

Denver already has hundreds of stores and other cities like neighboring Aurora, which took a wait-and-see approach, choosing not to implement recreational marijuana at first, have recently taken steps toward issuing its first licenses.

“It’s still a very tough business,” says Christian Sederberg, a transactions attorney whose newly minted marijuana law firm, Vicente-Sederberg, is booming with business now in several states. “It’s such a capital-intensive business to have to invest in building new grow facilities that comply with all the codes, to install the required surveillance cameras; and these entrepreneurs had limited access to capital because of federal laws that prohibit banks from lending to them or prevent them from taking out Small Business Administration loans.”

Only now, with a few months of business in the books, are some of these businesses becoming profitable. “You’re starting to see momentum behind this,” Sederbeg says. “But this we’re still in the very early stages of this transition from an unregulated market to a regulated market.”

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That transition isn’t happening overnight; in fact, the new regulated market and the budding marijuana industry may be injecting new life into a persistent black market as well, giving rise to additional corruption and crime. Take the case of Nathaniel Tallman, a 25-year-old who went missing back in January, was shot in the head and found months later in a ditch just across the Wyoming line for selling marijuana the old-fashioned way. Court documents show he moved 100 pounds, worth a quarter of a million dollars, every week.

It’s exactly the kind of marijuana-related violence that Denver District Attorney Mitch Morrissey has been sounding the alarm over for more than a year now, although specific crime statistics are hard to come by given that no one is tracking how many murders and robberies are related to marijuana. When the D.A. described 12 homicides to the city council last summer, referring to cases where victims were “laid down on the floor and killed,” he was mostly referring to crimes against medical marijuana caregivers operating out of their homes without much monitoring by the state.

But even the regulated retail operations, because they also do an all-cash business, remain prime targets, no matter how many surveillance cameras and security systems may be in place. “If you’re in this business, you’re likely to be the victim of a robbery or burglary a couple of times in the next few years,”Morrissey told me.

With a 25 percent tax on the state-regulated recreational pot you can buy in stores, it’s no wonder many Coloradans continue to purchase medical marijuana, which is taxed at only 2.9 percent, or to continue to use the unregulated, untaxed black market. Industry representatives believe pot-shop stickups will decrease as soon as Washington approves some sort of banking fix, and that most of the violent crime is happening on the black market.

And industry is increasingly the right word for it. It may not be a gold rush exactly, but Colorado is seeing a green rush of job growth in the marijuana business. When the first recreational marijuana shops opened up on January 1, the state had licensed 6,593 individuals to work in the industry. As of May 1, that figure is up to 9,641, about the same number of Coloradans employed as law-enforcement officers. At a recent marijuana-related job fair, the crowd was so large that applicants withstood a three-hour wait. In January, the first month of recreational marijuana sales, the industry cashed in on $14 million in total revenue, which meant about $4 million in tax revenues for the state. In March, the last month for which numbers are currently available, sales rose to $19 million.

“This isn’t an industry full of stoners,” says Samantha Jo Walsh, a lobbyist who represents many of the unionized workers in the industry. “There’s an elegant, high-minded entrepreneurial part of this industry creating high-paying jobs.”

Loopholes in the state’s loose medical marijuana laws, which allow individuals who declare themselves “caregivers” to own up to six plants and to distribute marijuana to hundreds of clients, are easy to exploit, enabling home-grow operations and sales that remain completely outside the regulated system. The 31 explosions already this year (compared with 11 all of last year) caused by hash-oil extraction inside homes underline that the DIY trend persists with pot.

“Just because we’ve legalized marijuana doesn’t mean it can’t still be illegally produced—and shutting that down is going to take some time,” says Jack Finlaw, Hickenlooper’s general counsel, who spearheaded last year’s marijuana taskforce that first came up with many of the regulations now written into law. “We haven’t gotten rid of medical marijuana; we’ve just overlaid recreational marijuana on top of it. At some point, we’re going to need to go back to voters and ask them to help us harmonize the two.”

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If 2013 was about writing Colorado’s marijuana laws, 2014 has been about tightening them. A newly created taskforce is about to issue a new rule requiring all marijuana edibles to be individually wrapped and sized in a single serving so consumers will no longer be at risk of eating one cookie or brownie that includes five or six times the recommended amount of concentrated THC.

And legislation to create the state-backed credit co-op, which requires approval from the Federal Reserve Bank to implement even after Hickenlooper signs it into law, may nudge Washington closer to finding a banking solution for what continues to be an all-cash business. “People are literally bringing in suitcases of money to pay their tax bills,” Finlaw tells me. Allowing marijuana businesses to have checking accounts and to do credit card transactions, he argues, will make it easier for them to do payroll, pay taxes—and easier for the state to monitor.

But much will still be outside of the state’s control—and questions remain about the overall impact on Colorado’s quality of life.

Although the industry points to several studies showing marijuana use is down among teens after legalization, Sgt. Jim Gerhardt, head of the North Metro Drug Task Force, worries about the impact on young people.

“They’re internalizing the messaging [behind the Amendment 64 campaign] that marijuana is ‘safer than alcohol,’” Gerhardt tells me. Based on a very small sample of schools in his own community, he sees an uptick in marijuana incidents at four high schools north of Denver this school year.“I’ve looked at what’s occupying the School Resource Officer at those schools, and of 260 cases, 30 percent of them were marijuana related. That’s more than alcohol-related incidents, assaults and fights.”

Add all this up and you can understand why politicians like Hickenlooper are so cautious about embracing legal marijuana—just as most Republicans on the statewide ballot this fall are hesitant to oppose it all that stridently. That amuses gubernatorial candidate Tom Tancredo. The former congressman, a hard-core libertarian, actually supported Amendment 64 from the get-go and is now one of four Republicans on the primary ballot. He may even be the front-runner—not that it has much to do with his position on pot. “I can tell all of my GOP rivals recognize they better take a softer stance on this,” Tancredotells me. “Funny, how things work out.” On both sides of the aisle, there’s recognition, born of caution, that it’s simply far too early in Colorado’s marijuana adventure to know how the story ends.

Although the Denver-based Marijuana Policy Project, the group behind Amendment 64, sold marijuana legalization as something that was certain to be successful, the results so far are mixed. As implementation takes shape, it’s becoming clear that this is really a social experiment on a grand scale.

“A lot of this is the law of unintended consequences,” Andrew Freedman, Hickenlooper’s new director of marijuana coordination, told me at the Capitol last week. “We don’t have a body of work behind any of this, so we’re trying to be careful and adaptable, to make adjustments as we go.”

The public health costs and benefits of marijuana are still being studied. Scientific research so far shows mixed results ranging, for example, from etiologic links to various cancers to pain relief and stress reduction among chemotherapy patients. In Colorado, we’re experiencing job growth along with growing pains—fatal accidents, for example, are down overall, but more of them are being blamed on stoned drivers. Public officials, for whom public safety remains paramount, aren’t beating the drum for a broader legalization movement in other states; but they share an optimism that Colorado is doing this as well as possible, in a way that will eventually serve as a model for other states.

“This is an area where good government can make a difference,” Freedman says. “If we do this right, we have a chance to save other communities a lot of heartache and maybe save some lives.”

But there’s uncertainty in his voice—if it’s done right.

Perhaps nothing better sums up where Colorado is a few months into its recreational marijuana experiment than, naturally, Cypress Hill, the California hip-hop group known for its obsession with weed. There’s at least some wisdom in its “Dr. Greenthumb” lyrics:

The scientifical, mystical oneGrowing my crops with the rays of the sunCome one come all and see how it’s doneIf you see the pigs there’s no need to runCause some of these pigs are down with GreenthumbBut you never know what be the outcome

Eli Stokols, an Emmy-winning reporter and anchor at Denver’s KDVR-TV, has covered Colorado politics for nearly a decade.